Yulon Motor Co (裕隆汽車) saw its consolidated net profit plunge 23 percent annually to NT$2.07 billion (US$64.8 million) in the first three quarters of this year due to weak car sales in China.
Consolidated sales slid 8 percent to NT$82.4 billion from the same period last year, the firm said.
The company distributes its own-brand Luxgen (納智捷) cars in the Chinese market via its subsidiary Dongfeng Yulon Motor Co (東風裕隆), a joint venture between Yulon and China’s No. 4 automaker, Dongfeng Automobile Co (東風汽車).
“Dongfeng Yulon faces harsh competition in the Chinese market,” Yulon president Yao Chen-hsiang (姚振祥) told an investors’ conference in Taipei yesterday.
The company needs to improve its brand awareness to fend off competition from well-known global brands, he said.
Chinese customers prefer sports utility vehicles (SUV), while Dongfeng Yulon mainly supplies sedans in China, he said.
Dongfeng Yulon is forecast to sell 42,000 Luxgen vehicles in China this year, indicating a 30.5 percent decline from last year’s 60,400 units.
In comparison, overall sales in China this year are expected to increase 13.8 percent to 28 million units, according to a report by Yulon.
Yulon is planning to launch its first SUV model in the second half of next year in Taiwan and China, a move that is expected to stimulate the company’s sales for the coming year.
The company would also upgrade some versions of its sedans in a bid to increase its market share in China.
The automaker aims to increase sales in China by 19.52 percent to 50,200 vehicles next year.
It also plans to improve its operational efficiency in China by eliminating some local dealers.
Dongfeng Yulon is selling cars at 500 dealerships across China, Yao told investors.
OPTIMISTIC
Despite the decline in sales and profits, Yao said that the company expects sales in the Chinese market to pick up next year.
Asked whether the company has a strategy to address the growing popularity of energy-efficient vehicles in China, Yao said Yulon is developing its own electric cars, without providing any details about a possible launch date.
Meanwhile, Yulon said its land development project in New Taipei City’s Xindian District (新店) will break ground in the second quarter of next year.
The residential and commercial project is to be completed in the fourth quarter of 2020.
Yulon shares were unchanged at NT$26.3 yesterday, while the benchmark TAIEX rose 1.02 percent.
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